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Immigration Daily News Agent challenges OMARA over their interpretation of interest on clients' accountAustralian Immigration Daily News
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Agent challenges OMARA over their interpretation of interest on clients' account
The following argument has been occurring between the OMARA and RMA, Carl Smart between 6 March 2014 and 14 March 2014. Mr Smart is now seeking legal advice through an accredited specialist in tax and finance law. In the mean time, I will FOI the qualifications for this OMARA Officer to ensure they are qualified to be giving advice of this kind. In my opinion, it is not enough for an officer at OMARA to say, 'I understand that'. An officer's understanding is not 'fact in law'.
OMARA EMAIL TO CARL SMART
Dear Mr Smart,
Following a review of your clients’ account statement I note that interest is being accrued.
As the clients’ account is to be used solely to hold client monies until your services are provided any interest earned from this account must be apportioned to your clients proportionally. In the alternative, you may open a non-interest bearing account hence alleviating the need to calculate and apportion interest to your clients on a monthly basis.
The latter option is considered best practise in the handling of client monies.
For your information please find attached a copy of the Authority’s Client Monies Toolkit which further addresses your financial obligations under the Code and identifies best practise in the handling of client monies.
https://www.mara.gov.au/media/77948/client_monies_toolkit_navigable_mar2013.pdf
Regards,
Sarah Alkan
Team Leader Registration & Professional Development
Office of the Migration Agents Registration Authority
Telephone: (02) 9078 3544
Email This email address is being protected from spambots. You need JavaScript enabled to view it.
Website www.mara.gov.au
CARL SMART RESPONSE
Sarah,
I've reviewed the Code of Conduct and cannot find which part of the Code of Conduct I am in breach of by collecting interest from money held in a Clients’ Account. I also cannot find any reference in the Code of Conduct which specifically states interest collected in a Clients’ Account should be paid back to clients.
My understanding is that the toolkit referred to in your email below is a guide for Agents. It does not form an extension of the Code of Conduct.
Perhaps you can enlighten me?
Warm regards,
Carl Smart
Director
Mob. +61 (0) 402 871 721 (Australian number)
MARN 0100781
OMARA RESPONSE
For-Official-Use-Only
Dear Mr Smart,
I understand that the money that you collect in advance from clients is placed into your client account. As this money belongs to your clients until your immigration services are completed, any interest accrued on your client money, is the property of the client.
In addition, you have provided your clients a Service Agreement which indicates your schedule of fees. Therefore any financial benefit in addition to this Agreement, would be outside your schedule of fees.
Part 7 financial duties under clause 7.1 of the Code of Conduct defines the client account specifically as:
(b) money paid by clients to the agent for fees and disbursements (the clients’ account).
The Authority’s toolkit is designed to provide additional clarification and case examples for best practise.
Regards,
Sarah Alkan
Team Leader Registration & Professional Development
Office of the Migration Agents Registration Authority
Telephone: (02) 9078 3544
Email This email address is being protected from spambots. You need JavaScript enabled to view it.
Website www.mara.gov.au
CARL SMART RESPONSE
Sarah,
I will get some legal advice. It appears that MARA likes to inflict their own rather loose interpretation on the Code on Agents.
MARA should spend more time assisting Agents in a positive manner rather than niggling at them for the smallest of things.
Comments
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Friday, 14 March 2014The Migraton Agents Registration Authority is imploding. How the Department of Immigration ever thought they, in all their infinite wisdom could manage agents is beyond me. The fall of MARA is upon us.
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Friday, 14 March 2014
If I was made aware that an agent was going to hold my money, earn interest on it, and keep that interest for themselves, I would find myself an agent who upheld some basic ethical standards and practiced common courtesy.
Legally, it comes down to whether the money is being held in trust, and by the sounds of things if it is not the case at the moment, it really should be.
It is a stain on the industry (it's not a profession) that agents are here defending this practice. In any well regulated and respected profession, this kind of conduct would be criminal and the agent deregistered. -
Friday, 14 March 2014
I totally agree with you on every word Matt! Oh, and I don't work for DIBP, OMARA or any Government Department, I am an RMA...
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Friday, 14 March 2014
Matt obviously works at the DIBP or MARA and has no idea.
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Friday, 14 March 2014
Actually, I don't work for either of them - I just don't believe it is ethical to profit off someone's money without their consent. Continued behaviour like this will lead to greater regulation and further reputational damage to your industry.
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Friday, 14 March 2014
I also received the template letter from MARA with my registration renewal.
While I do believe some agents aren't fully appreciative of the fact that money received upfront from clients is clearly trust money and belongs to clients, it is equally the case that clients placing money in trust with other professionals routinely do not receive interest that accrues on their deposit (e.g. interest on trust funds to solicitors goes to legal aid, not the client).
Provided the fact the agent may retain interest is covered in the fee agreement as a financial benefit I don't see how MARA could require agents to apportion interest received.
Furthermore, we are not bankers and the only fair way to apportion interest would be to account for both the proportion of funds held for various clients AND the time the funds were held from, so that clients who only just deposited money are not given an undue share of interest. Does the MARA have some complex interest apportionment software it would like to share with us? Is anyone at the MARA capable and qualified to calculate a a fair apportionment? I note that ANZ recently had to reconfigure its interest calculations on offset accounts, so even the banks can't do it. We, as professional migration agents, can certainly not be expected to get the figures right.
If MARA want to require agents to open interest-free accounts they must change the Code of Conduct, in my view. Setting out guidelines is not the same thing, and leaves agents in a difficult position whereby they may be compliant with the code but the MARA takes it's own view. As individuals we don't want to irk the regulator and risk not being registered or being somehow blacklisted by DIBP (given OMARA is now one and the same).· Frank Lin likes this comment. -
Friday, 14 March 2014
So Matt then do you think that Legal Aid getting money from interest on Solicitors account is unethical? How do you see this problem being fixed? I don't think agents are being unethical here. Do you also think DIBP is unethical because it collects interest on all the fees it earns and then sits on cases for 3 years? What exactly is unethical about this?
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Friday, 14 March 2014
Are you familiar with the purpose of Legal Aid? The equivalent would be interest earned going to fund applications where applicants cannot afford to apply. That would be an ethical use, if regulated and agreed.
DIBP doesn't collect interest, the general revenue does. They also collect interest on your tax refund. It's not ethical in my opinion, but then this is not about the department collecting interest, this is about an agent collecting interest without telling anyone. -
Friday, 14 March 2014
Hi Rabid Dog,
I do take offense when people make political party partisan comments on the blog. It is inappropriate. We have our common professional interests but we vote the way we vote. People who barrack for one party on the blog should be censured including Labor voters. Or at least, if we want to have arguments amongst ourselves about party politics then let's go for it, but this will not advance our professional interests. -
Friday, 14 March 2014
SIMPLE FIX: Call the bank tell them you want all interest, monthly fees, etc put in or taken out of your general trading account ..
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Friday, 14 March 2014
Interest? What interest? I am charged more in bank fees that I receive in interest. Do I proportion a percentage of the bank charges back to the client? Do the clients have an ethical claim on the profits made by the banks while the money is sitting in our accounts in addition to their claim on the barely existent interest we receive?
And what about the law? Our Clients' Accounts are set up under the Migration Act, they are not lawyers' trust accounts. They are different. But under the common law, is the money we receive into our Clients' Accounts under the Act also trust monies triggering common law trust obligations?
Probably. But does the MARA have an opinion on this it would like to share?
Who knows, and frankly, who cares. Let the High Court decide, and if no-one could be bothered taking a case to the High Court because the amount of money we earn in interest does not off-set the bank fees then let the matter rest.
In fact, the core of any profession is that it is self funding. This brings independence. The Law Societies earn huge amounts of money through their control of trust fund arrangements, and Pharmacists own the jelly bean brand that helps fund their lobbying activities.
Instead we migration agents are arguing amongst ourselves over the peanuts of interest earned in our Client Accounts, all concerned about the ethics of earning a peanut, and are barely a profession in terms of our ability to control our professional environment and income structure.
The regulations should be that client money is paid into one central account maintained by the Migration Alliance accessible to all agents. The interest on the account funds is then paid to the MA to assert our independence in the face of government hostility (and yes bloggers, this hostility is bipartisan and not an invention of the Gillardian ALP evil as some would have us believe). -
Saturday, 15 March 2014
Let's keep politics out of these discussions. Who any of us support or vote for is not relevant to the discussion.
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Monday, 17 March 2014
It is not beyond our capabilities to open a bank account that is non-interest bearing. Over the years I've opened such an account with Westpac and ANZ and I'm pretty sure that most other banks would be able to do so too. The bank fees are paid out of my operating account which in my opinion is the cost of doing business and having peace of mind that I will be paid for the work and not having to chase the money at a later date or have bad debtors.
The only money in the Clients' Account is in fact client money. In English the apostrophe denotes ownership i.e. the account that belongs to the clients. As agents we have a choice, we either take money up front, place it in a safe place for the client whilst we are doing the work until we are entitled to move it into our own account. Or we invoice after we have completed the work and not bother with a clients' account.
As everyone has rightly said there are ways of making sure we comply by altering our contracts with the clients etc. to notify them of the financial benefit.
At the end of the day we are talking about a paltry sum each year in either interest accrued or bank fees. As an industry we do have the advantage that clients are willing to pay upfront and we should not forget that this assists us with our cashflow (although this may be one of the few advantages of our industry).
Basically suck it up and worry about the important stuff. I do not think it looks good earning interest on clients money, even though it is coffee money, as it is not mandatory that we collect funds in advance. -
Friday, 21 March 2014
Dear MA
Does this mean that we can offset costs to the Client Account? I think not, so how can the interest earned be credited to the Clients Account?
Even if we had to Credit funds to the Clients Account how do we work out how much to credit each client?
How did OMARA find out about the interest? If the account was properly set up, any interest should show up in the business account. -
Friday, 21 March 2014
The interest earned does not even cover the monthly account fees.
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Saturday, 22 March 2014
The regulation on client accounts should have been set up differently. In the absence of that type of careful forward planning, we have to deal with what we have.
Even if the money is in an account held by the agent, until the agent is entitled to the money, they shouldn't be taking interest earned before that date. It should go back to the client. I cant understand how agents can justify to themselves that the interest is theirs and not the clients in these circumstances.
I don't think the solution is to have a clause in a costs agreement which says the interest is the agents money either. If something is not yours, even if the client agrees to it, it just doesn't sound right to me to take it. -
Thursday, 26 June 2014
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Thursday, 26 June 2014
Hello all,
This is a contractual matter. The ownership of the money on deposit is not a Code of Conduct matter. The money does not "belong to the client". The money is the property of the migration agent; it is held in a "client account" only because that is demanded by the Code. But the code cannot change ownership of assets. The money is the agent's money; if he or she has a no win no fee agreement, the agent is under a contractual obligation to refund the payment.
It would be good value for MARA to get some legal advice before they put forward opinions about legal ownership.
John Findley 0316938 -
Saturday, 17 September 2016
Hi everyone,
I have a query and hope you can help.If a client gave a migration agent $2000 advance for a visa and after the initial work is missing and cannot be found( left the country) What would a migration agent required to do by law and how long is he required to hold the money if at all he has to/
Immigration blog
Nicholas I think free speech is important. Agents are entitled to their point of view. I vote Labor! I note you always get the SH1ts when people bag Labor.